The Employment Situation for October – Employed Or Unemployed, That Is The Question

The Bureau of Labor Statistics (BLS) released the Employment Situation report for October and the results are all over the map. Because of different definitions used in the surveys, the impact of the partial federal government shutdown was negligible in the establishment survey but substantial in the household survey. And unrelated to the shutdown and furloughed federal workers there was a sharp decline in the labor force. The report is good, bad or inexplicable depending on which part you focus on.

The establishment survey was stronger than expected showing payroll employment expanded by 204,000 with the private sector adding 212,000 and the government sector subtracting 8,000. The establishment survey counts people who worked or received pay, so the furloughed federal workers were treated as employed. That’s the good part of the report.

The household survey categorized the furloughed federal workers as unemployed on temporary layoff and included a 448,000 increase in that subcategory of the unemployed. That’s the bad part of the report. But the number of employed persons declined by 735,000, the number of unemployed persons increased by only 17,000, and the number of persons leaving the labor force increased by 720,000. That’s an extremely large number of persons leaving the labor force and an extremely large gap between the decline in employed and increase in unemployed persons. That’s the inexplicable part of the report.

The unemployment rate ticked up to 7.3% from 7.2% which the BLS characterized as “little changed.” It really amounts to rounding back up the small change that was rounded down last month (0.04%).

It’s difficult to interpret this report. Expectations were for a soft report based on shutdown-related malaise, without regard to how the federal workers were categorized. This report defied all the expectations.